The 10 Scariest Moments for Every Small-Business Owner

Running your own company brings plenty of rewards, but also quite a few hair-raising moments. Here's how to cope with the worst of them.
Getting Small Businesses Unstuck, Shafran Moltz Group
October 29, 2012

Halloween may be a spooky time of year, but running a small business can produce many scary moments all throughout the year. Here are the top ten scariest times for any business owner:

1. Your first day. Your first day of being in your own business full-time is filled with excitement and fear. You may ask yourself, "What have I really done? Did I make a mistake?" What helps: Visualize this moment in your mind before it becomes a reality. Ask yourself how you feel about it and discover the range of emotions that come up. When those questions enter your mind on your first day, you will have worked out some of the answers.

2. The Cash Crunch. Your bookkeeper says you are out of cash and can't meet payroll or other financial obligations. What helps: Learn how to read your monthly financial statements especially the cash flow statement so there are no surprises.

3. The Desertion. When your best employee hands in her two-week notice, your first reaction will always be one of disbelief and then, "How will it hurt my business?" What helps: Ensure you have non-compete agreements with all employees and frequently review their career path inside the company in order to limit surprises.

4. The Betrayal. You discover your bookkeeper is stealing from the company. What the #!@#$&? What helps: After you call the police, set up a system of checks and balances to make this harder to ever happen again. For example, have one person create vendors and another write checks to them. Have a third person balance the checkbook. By separating responsibilities, you make it more difficult for a person to embezzle from the business.

5. The Credit Crunch. Without warning, the bank cuts off your line of credit, or reduces it to the amount that is outstanding on your loan. What helps: Understand cash flow so you do not pay back your loan too soon. Only rely on the cash in the bank, not the credit available on your line to run your business.

6. The Lawsuit.
 It is always shocking when you receive a piece of mail informing you that a former employee or vendor is taking you to court. What helps: Have good contracts for employees and vendors that are pre-approved by legal counsel. Avoid long legal battles and settle reasonable claims when possible. They can become a huge distraction.

7. The Audit. It's almost never good news when the IRS contacts you and you can expect that it will cost your business money. What helps: Use professional CPAs to review your statements and taxes. Get them involved immediately when the IRS or other governmental agencies come calling.

8. The Breakup. When your No. 1 customer leaves you, there's nothing to do but to pick yourself up off the floor. What helps: Never be dependent on one large customer for a majority of your business. Know which customers make up 80 percent of your business and grow to spread the company risk accordingly.

9. The Price War. When your biggest competitor decides to cut its price to half of what you charge, you'll first wonder how they can make money at that price. You will next wonder if anyone will continue to buy from you. What helps: Never be in a position where your company competes on price. Customers buy value. Build it within your products' sales proposition.

10. The Data Disaster. When you lose all of your businesses electronics records to a virus, a system failure or a hardware problem, firing your IT manager might make you feel a little better, but it won't solve the problem. What helps: Run a drill for this scenario to ensure your company can recoup from the outage. Don't just assume there is a backup. Instead, test restarting your system from the backup files to make sure everything will run smoothly.

 Photo: Thinkstock.